The Real Deal of U.S. “Free Trade” with Mexico and Trump’s Tariffs Against Mexico...
Domination, Exploitation, and Fascist Bullying
| revcom.us
As Donald Trump tells it... Mexico is taking unfair advantage of the U.S. with cheap imports… “we’ve been had by the worst trade deal in history” and “we have to reclaim our economy, our jobs, and our greatness.”
Then there’s another telling… this from mainstream sections of the U.S. ruling class, many liberal Democrats, and so-called “informed public opinion”: free trade is “win-win” for the U.S. and Mexico, with more jobs and higher growth for everyone. Tariffs (which are a kind of sales tax on goods coming into the U.S.) that limit trade will “hurt U.S. companies” (pinching profits), “hurt U.S. workers” (they may lose jobs), and “hurt U.S. consumers” (with higher prices).
What both of these narratives have in common is: a) a total whitewash and obliteration of U.S. domination over Mexico, and b) rank and sickening American chauvinism—what’s paramount and all-consuming is… what’s good for the U.S., what it means for “us,” to hell with the rest of the world.
Three Things They Don’t Tell You but You Need to Know…and One Key Thing You Need to Do
1) Mexico is a neo-colony of the United States.
First things first when talking about the “sanctity of borders”: the U.S. violently seized and incorporated half of Mexico’s territory in the mid-1800s. Mexico’s government and state system are formally independent. But U.S. imperialism dominates Mexico and subordinates Mexico to its global interests.
*Economically, Mexico is thoroughly penetrated by U.S. transnational corporations. The U.S. is the largest source of foreign investment in Mexico and exerts tremendous power over crucial sectors of the Mexican economy, like auto. The majority of Mexico’s export-oriented assembly plants in auto parts and electronics have U.S. parent companies. The U.S. is far and away the largest provider of foreign loans to Mexico: about 4 of every 10 dollars of Mexico’s foreign debt is owed to U.S. financial institutions; and 75 percent of Mexico’s foreign debt is priced in dollars. Mexico’s export structure is geared to and serves the U.S. market: fully 80 percent of Mexico’s exports go to the U.S. And because of Mexico’s dependency on the U.S., its economy is subject to the ups and downs of the U.S. economy.
*Militarily, there are close military connections between the U.S. and the Mexican state. These include the sale and transfer of U.S. weapons, joint military training and military exercises (carried out under the banner of combating drugs), and policing of the U.S.-Mexico border. This is a military alliance dominated by the U.S. The Mexican war on drugs, largely overseen by the U.S., has—and this is a conservative estimate—cost the lives of 200,000 Mexicans since 2006.
2) NAFTA deepened U.S. penetration of Mexico—leading to more intense exploitation, to greater distortion and dependency of the Mexican economy, and to heightened suffering for the Mexican people.
*A key U.S. objective of the North American Free Trade Agreement of 1994 (NAFTA) was to more thoroughly and tightly integrate cheap-labor Mexican manufacturing activity—especially in auto and especially in the northern parts of Mexico—into the global production chains of U.S. imperialism. To cite one measure of advantage for U.S. capital: the average manufacturing wage in the U.S. is about $21 per hour—while in Mexico, including sectors of high-tech manufacturing, it is $2 per hour (a 10-fold differential).
*The fundamental aim of NAFTA was to create more favorable economic conditions in Mexico to enhance the competitiveness and profitability of U.S. capital in the world market. NAFTA contributed to the expansion of complex, profit-driven cross-border supply chains in which specialized production leads to greater efficiency, productivity, and profit. And let’s demystify some bullshit right now: much of the U.S. trade deficit with Mexico that Donald Trump lashes out at is in fact due to exports by U.S. companies with operations in Mexico, like Ford and General Motors. These companies also move huge profits back into the U.S.
*NAFTA “opened up” Mexican agriculture to U.S. foreign trade and investment, to devastating effect. Cheaply produced, and U.S. government-subsidized, corn flooded Mexican markets. As a result, some 1.1 million small Mexican farmers—who provided much of the corn that was a staple of the Mexican diet (and also fresh fruits and vegetables)—could not compete and were driven from the land. And another 1.4 million Mexicans dependent upon the farm sector were displaced from work and land. As indebted small producers abandoned farming, foreign agribusiness firms grabbed up and consolidated prime land into large agro-export plantations. Forty-five percent of Mexico’s food needs are now met by imports—including much of the corn that it consumes! The nutritional profile of Mexicans has been reshaped by processed foods imported from the U.S.—while Mexico exports fresh fruits and vegetables to the U.S.
*NAFTA accentuated the gap between the more developed north of Mexico and the southern regions. Poverty has grown in Mexico's southern states; and they are ever-more dependent on remittances (portions of earnings sent home) by Mexicans who have emigrated to work in the U.S. In many cases, these remittances cover the very survival needs of huge swaths of the population in Mexico's south.
*More of the laboring population works in unstable “informal jobs”—at poverty wages, with few if any benefits, and little security. In 2018, 7 of every 10 Mexicans was living in poverty or vulnerability.
No, the U.S. was not, as Trump bellows, the “victim” of NAFTA. No, NAFTA was not, as liberal imperialists argue, a deal that was or could be “good for everyone.” Mexico was savaged by it, U.S. capital derived the benefits of it. And while sectors of U.S. workers saw wages get squeezed and jobs disappear—this was not Mexico’s doing but the workings of imperialist globalization. The truth is that the gap in the standard of living between people in the U.S. and the people of Mexico is not only howlingly wide—but very much a product of U.S. domination over Mexico and other oppressed countries of the Third World.
3) Trump canceled and renegotiated NAFTA to U.S. advantage. He is using tariffs to bludgeon Mexico into submitting to his anti-immigrant, secure-the-border program and fascist global agenda. And the Mexican people will suffer even more.
Trump renegotiated NAFTA. The new agreement resembles the original but puts certain restrictions on auto production in Mexico and extends the lifespan of intellectual property rights of U.S. pharmaceutical companies. The Mexican government went along because its whole economy has been shaped by and subordinated to the trade-investment structures of NAFTA—and the new NAFTA in fact further limits Mexico’s ability to diversify beyond, and pegs its economy more firmly to, the U.S..
Not long after the ink had dried, the U.S. went into a new bullying mode. Trump issued an ultimatum to the Mexican state: you seal your southern border with Guatemala and step up the lockdown of the northern border with the U.S…. or you’re going to pay with tariffs (again, tariffs raise the prices of goods entering the U.S. from another country and make these goods less competitive because of their higher price). The tariffs that Trump threatened against Mexico, and that still hang over the head of Mexico, are not principally driven by economics. They serve a larger fascist program and geopolitical agenda.
*On the one hand, this is about implementing and enforcing the fascist regime’s agenda and policies towards immigrants, policies bound with great nation chauvinism and white supremacy: America for Americans, “make America white again.” The clampdown against immigrants is part of a larger “locking down” and “walling off” approach towards a problem for which the ruling class as a whole has NO ANSWER: the workings of this system are driving millions of people in “the third world” of oppressed countries from their homes and lands—from the effects of global warming, from wars, from economic deprivation, from social devastation and violence—to seek refuge in the imperialist citadels of the world, like the U.S., Europe and Australia.
*On the other hand, Trump is using these tariffs to send a message to imperialist allies, rivals, and governments throughout the world: “It will be our way, or no way.” The message is that no economic agreement or relationship can be considered secure, because “we reserve the right to act, to impose tariffs or sanctions, and to renegotiate on our terms when we decide it necessary.” It is fascist bullying to strengthen empire.
*Trump can hold Mexico hostage to tariffs precisely because, to stress again, Mexico is dependent on and subordinate to U.S. imperialism—to the U.S. market and to U.S. infusions of capital and finance and technology.
*Mexican President Andrés Manuel López Obrador has caved in to U.S. demands to limit immigration to the U.S. He did this in order to avoid the punishing tariffs. AMLO, as he is called, is the leader of the National Regeneration Movement and masquerades as a progressive socialist-minded leader. But he answers to the logic of capital and the imperatives of maintaining a dependent client regime of U.S imperialism.
Here was the situation. In states such as Chiapas, Guerrero, Michoacán, and Oaxaca, informal employment, poverty-level and unstable, exceeds 50 percent. Significant tariffs (and Trump threatened going as high as 25 percent) would lead to job losses... which could lead to protest and social unrest... which could destabilize the investment climate... and the regime! Further, the Mexican state is already cutting social programs under AMLO and has little maneuvering room to provide additional economic relief to newly displaced workers. If AMLO tried to retaliate by putting tariffs on U.S. goods, well, the U.S. could come back with even more brutal economic warfare. Remember how Mexico depends on imports of corn and soybeans, which are now at record levels of purchases.
What all this means is that for Mexico to maintain growth and profitability under conditions of tightening U.S. imperial domination—exploitation will have to be intensified, government programs (as mentioned, already strapped) will have to be further cut back, and the Mexican state will have to tack and maneuver in response to U.S dictates.
*So Lopez Obrador capitulated to U.S. demands around immigration. He has agreed to mobilize up to 6,000 National Guard troops to prevent migrants from entering Mexico through its southern border with Guatemala. The Mexican state has also agreed to bolster draconian measures to ensure that more refugees seeking asylum in the U.S.—which is totally protected by international law—will be sent back to Mexico while they wait for their claims to be processed by the United States.
The reality is this: Donald Trump is getting a version of his “border wall” on Mexico’s southern border with Guatemala. The reality is that the lives of tens of thousands of refugees and immigrants are now in even greater jeopardy. This is the handiwork of U.S. imperialism. It is unacceptable, it is intolerable.
4) And one key thing people need to do: Stop thinking like Americans, start thinking about HUMANITY.
Selected Sources
Congressional Research Service, U.S.-Mexico Economic Relations: Trends, Issues, and Implications, March 26, 2019
Mexico Center, Rice University, Jesús Velasco, The Future of U.S.-Mexico Relations: A Tale of Two Crises, August 2018
The Mazatlán Post, Mexico’s External Debt: Who does Mexico owe? And how much, January 30, 2019
Econofact, Alonso de Gortari, How Much of Your Car Is Made in Mexico? January 20, 2018
Tecma University, Juan Arvilla, Mexico Labor Costs Continue to Benefit Manufacturing, 2019
Public Citizen’s Global Trade Watch, NAFTA’s Legacy for Mexico: Economic Displacement , Lower Wages for Most, Increased Migration, March 2018
OECD, Global and Mexico Economic Outlook 2018 (Poverty in Mexico)
Stratfor Worldview, Despite a Deal on Migration, a Tariff Threat Still Hangs Over Mexico, June 11, 2019
NACLA, Guadalupe Correa-Cabrera and Laura Weiss, El Chapo and Mexico’s Drug War Spectacle, March 4, 2019
Bloomberg Opinion, Daniel Moss, New Era of Free Trade Leaves Mexico More Isolated, October 9, 2018
GLOSSARY OF TERMS
Neocolonialism is a form of control by rich imperialist countries over oppressed countries in the Third World. It is control by indirect means rather than direct colonial governance—but results in colonial-like exploitation. Neocolonial power is exercised through client regimes, like those of Mexico, Nigeria, and Egypt, that provide favorable economic conditions for foreign investment and repress the masses—and that depend on economic and military assistance from imperialist powers. Neocolonialism works through transnational corporations and international financial institutions like the World Bank and International Monetary Fund, and through cultural-ideological dominance. Coups, interventions, and military invasions (like the U.S. in Iraq and Afghanistan) are tools of neocolonial rule.
Transnational refers to activities, movements, and organizations that span international boundaries. General Motors is a transnational corporation: with a home base in the United States, it operates in many different countries.
Supply, or production, chain consists of the various stages involved in the production of a particular product. Automotive supply chains are among the most complex. A car may contain more than 20,000 parts originating from thousands of different suppliers in different countries. Imperialist capital develops supply chains to maximize profits, making extensive use of low-wage labor in oppressed countries.
Informal employment refers to jobs that are highly insecure, not subject to national labor laws and regulations, with hours of work and wages below those of standard jobs, and generally without benefits (like social security). Sometimes called casual labor, these jobs are often for short duration. Informal work is part of the survival strategy of much of the global workforce, especially in the Third World.
“Would Mexico & Central America still be the US' backyard after the revolution?”
From the Q&A following the speech by Bob Avakian Why We Need An Actual Revolution And How We Can Really Make Revolution
Some Background on Trump’s Threats of Tariffs to Demand Mexico Be U.S.’s Partner in Crimes Against Refugees
Over the recent period, using the threat of crippling, escalating tariffs on all goods coming from Mexico as his cudgel, Trump demanded that Mexico knuckle under and become an even more thorough collaborator in, and enforcer of, the Trump/Pence regime’s goal of effectively shutting down the right to asylum for mounting numbers of refugees from Central America fleeing poverty, unemployment, violence, and repression in their own countries.
On June 7, just hours before the tariffs against Mexico were to go into effect, Trump announced that Mexico had signed a “joint declaration” agreeing to “take unprecedented steps to increase enforcement to curb irregular migration.” Mexico also agreed to expand the “Remain in Mexico” program across the entire U.S.-Mexico border. This program forces thousands to wait for asylum in Mexico for months, or even years, until their asylum claims are decided, having to find work and survive in Mexico’s dangerous border cities instead of being able to join families and friends in the U.S. while they wait.
Mexico is also reportedly close to signing an agreement—in complete violation of U.S. and international law—that would force all Central American refugees to apply for asylum in the first country they enter. If that goes into effect, Guatemalans would have to apply for asylum in Mexico, while Hondurans and Salvadorans would be forced to apply for asylum in Guatemala—a country with conditions of poverty so severe, magnified by global warming that is destroying its crops, that children are dying of hunger.
Even before June 7, Mexico had already been conceding for weeks and months to U.S. bullying to head off the tariff threat. Mexican armed forces have been carrying out raids and setting up 24-hour roadblocks of routes north. Recently, Mexico deployed 6,000 heavily armed troops, part of a newly formed National Guard, to block a caravan of about 1,000 migrants and force them to turn around just a day after crossing the border from Guatemala.
To assure the U.S. that Mexico’s intelligence agencies were on board as well, Mexican authorities arrested two prominent humanitarian aid workers with Pueblo Sin Fronteras (PSF). The two aid workers had played key roles in organizing last year’s large public caravans that traveled from Honduras to the U.S. The caravans were viciously attacked by Trump and his fascist regime as “invaders” of America’s “sacred borders.” According to secret documents released to the press last winter, they had been under surveillance by a joint U.S.-Mexico intelligence operation—which also targeted other activists, lawyers, and journalists—after the Border Patrol teargassed refugees in Tijuana in November 2018. One of the aid workers, Irineo Mujica, director of PSF, has worked closely with Scott Warren, a volunteer with another aid group, No More Deaths. Warren had been on trial in Tucson facing outrageous felony charges simply for providing food, clothes and a brief place to stay for two desperate migrants before the trial ended in a hung jury.
The Trump/Pence regime had begun meeting with the Mexican foreign minister right after the inauguration of the newly elected president, Andrés Manuel López Obrador (known as AMLO). This culminated in December with the U.S. State Department announcing an agreement with Mexico “on a strategic framework for our cooperation in Central America to address root causes of migration.” Mexico’s foreign minister said that up to $10.6 billion in existing U.S. funding was promised for “institutional reform” and “good government” initiatives in Central America, along with regional development in southern Mexico. In other words, U.S. imperialism intends to use Mexico as regional enforcer of imperialist interests. Nothing about this agreement has anything to do with the interests of the masses of people in Central America or Mexico—at all.
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